Tuesday, March 25, 2008

Clarification

I'm not sure how this all happened but I feel like I've gotten myself in a corner that I don't want to be in. I know I put a lot of information out there into the universe... and really that is my nature... and because I may put out more than the average person, I think people tend to assume I'm putting it ALL out there. I'm not.

My mother thinks I'm a bad secret keeper. To this I replied "how would you know?". She only knows the things I'm willing to tell. There are plenty of things I don't. In fact I may be the very best secret keeper you've ever met. I think my openness lends itself to assumptions. I appear transparent. I sometimes become you... or a LOT like you. Sometimes I am. Sometimes I'm not. Most of the time I'm okay with that. And maybe that has a lot to do with why so many people come here.I use my blog to process my life and motivate myself. Sometimes this blog becomes a community for other's to do the same. In the spirit of that I started a series of posts on finances. I did this for two reasons: #1 because I thought it was time that I took the same kind of thoughtful responsibility for our finances that I have over my diet & exercise, and #2 because it is a good conversation topic.

The thing about finances is this...They are highly personal. Not just for me but for everyone. Lots of people read my blog. My niece, my grandmother, my neighbor... hundreds of nameless strangers. I would love for there to be more candid discussions about finance out there. I think a LOT of us feel lost, or confused, or just plain uninformed. I am happy to talk about my experience trying to take more control over this important area of my life. I am happy for you to talk about your experiences with this as well. But I am not asking for your opinion on how we should adjust our budget or find more savings. We have to decide for ourselves which things add meaning to our life and which things are superfluous. Only we can know that for ourselves... just as only you can know that for yourself.

We are not in financial lock down. We are not facing a budget crisis. We are just mindlessly spending. As I have stated numerous times we have no debt, we pay all our bills in full and on time. Do we spend every penny that comes through here these days? Yes. Do I wish we paid more attention to how we spend those pennies? Yes. Is Mr F's current job situation and freelance work payment schedule (or lack there of) sometimes stressful? Yes. Are we broke... or even remotely close to it? No. I have intentionally not revealed our entire financial situation since I don't really need everyone to know our entire financial situation. I only reported our yearly spending on things that I didn't mind revealing and that I thought were relatively judgment free.

Here are the facts:We make enough to contribute to a 401K, a ROTH IRA, and two 529s every year AND pay all our bills... in fact we even over-pay our mortgage principal every month. We have no debt outside of our mortgage. In the spirit of full (ish) disclosure Mr F had acquired a reasonable amount of debt between 2002-2005 due ONLY to poor money management (it appears we had hired the wrong spouse as our financial manager) and poor spousal communication skills. Upon his being fired from that position that situation has been alleviated. Are we sitting on millions? No. But we do have investments... we just chose to live our life not touching those and pretending they don't exist (which in the current market is best since looking at those statements is depressing) and are letting those stocks do what they need to. Would we like to save more? Yes.

But there is more to our story as I'm sure there is more to yours. Mr F makes the majority of his income through his freelance business. That means that our monthly income can vary by a couple thousand dollars a month... from not quite enough to pay the bills to more than enough. This takes very careful planning on my part when it comes to bill paying and can be quite stressful (Mr F's little foray into debt ever present in my mind). I would like to find the small leaks in our spending so that I can feel that I have a better cushion in our checking account. Just as Mr F's monthly income varies so does his yearly income... by up to many thousands of dollars! Sometimes that is for the better (Yay! Disney!) and sometimes for the worse (Boo... returning Ugg boots). And that is where the stress really comes into play. We make enough... this year. Will we make enough next year? I don't know. We never know.

So that is why we are on this mission. Because I want to be accountable and responsible for our spending. I want to know how and where we spend it so that should we have to start shaving off "wants" I'd know where to shave them. Thankfully we are not at that point yet.

22 comments:

I just added up how much we pay yearly for our cable bill--just TV--and it made me want to vomit. We don't even watch that much TV to make it worth it. All I do it DVR shows and then never watch them anyway. Now I am considering getting rid of it, but then there would be no more kid channels (my kids are too old for Clifford on PBS).

Do you pay a ton of money for heating costs up in Michigan? I know we plunk down like $2500 a year and we keep it cold in this house.

PS I just bought the Life.doc notebook at Target for $20. Haven't opened it yet though...

Our heating is not that much. We have natural gas. Our total for gas/electric for the year (so heating and cooling... and I have the air on from May-Oct) was about $3000. So I think ours is a bit more. The winters run us about $350/ month and the summers $150/ month.

I also want to get rid of the DirecTV but we can't even get regular TV w/o it.

First off, you are awesome. But you already know I think that. And second, as a 23 year old, this type of conversation is what will hopefully lead me to NOT be in debt in my future. I grew up with parents with the worst spending habits imaginable and no concept of saving money, or investing in a future.This is what led me to ridiculous credit card debt that I am slowly getting rid of.

This is the kind of conversation that prevents things like the housing crisis the US is in. I am thankful, not only for you, but for the fact that I am being opened to all this information so that I do not end up like parents, who have zero retirement, and no hope in ever retiring in the future without their kids helping them. With my friends I talk openly about money all the time. A few of them find it weird, but honestly, that is the only way we will ever be able to save ourselves financially. Thank you a million times for doing this and being so open. It is people like you who make everyone become better human beings.

I think that being in debt at least at one point in your life is a good learning experience. You learn who the better financier is, what your limits are, and where you do and especially do not want to be, financially speaking.

Yeah, we could be using our money much more efficiently. Though we are not in debt, we pay off credits cards every cycle, we put into savings every month, and we invest. The only thing we haven't started is a 529, which we need to get going on with #2 approaching.

...and yeah, just because you're open about it doesn't mean you need advice or lecturing.

Cara,You are the sweetest person ever! You are always so generous and kind to me... I really appreciate it. I'm not sure I'm that deserving but I appreciate your kindess :)You'll do just fine. You are far more aware of what you are doing then I was at your age.

I don't know why people are more open I really don't. I wish people could just say "we drowning in debt" or "I ate an entire pizza last night" or "we don't ever have sex"... you know be real without the fear of being judged for it because the truth is we all can relate to the reality more than the false assumptions and expectations.

Amy,"You learn who the better financier is, what your limits are, and where you do and especially do not want to be, financially speaking."It's true. We learned a lot from Mr F's mistakes.

And... CONGRATULATIONS!!! :)

Julie,thanks:) Really it's too much... but I appreciate it.

"I am always kind to the older folk...rich or poor:) Apparently I had a hidden motive."LOL! I hope it works out for you ;)

Mrs. F, When Ken and I lived in Texas we got ourselves into a house that was way too expensive, property taxes that were out of control and then I was laid off from my job and we had no savings...talk about financial crisis! We sold our house, moved in with my in laws while we got our bearings and decided to move back to the East Coast...turned out to be the best choice we could have made. I got a great job here, we worked hard and we paid our debts (read:credit cards) off!!!Now we contribute to my company's 401K, we have a ROTH as well and savings that would cover us if I were to lose my job again. We also have a mortagage that is affordable on one salary. I may not know where all the money is, but I know we will NEVER go back to where we were. Thanks for sharing with us, thanks for putting as much out there as you did...

I like how you get straight to the point! I'm only in college now, so real finances seem distant but in actuality they are in the imminent future!!

It is good to see a woman who is so savvy about finances. My dad would be proud :) He just bought be this book: "Money Smart Women: Everything You Need to Know to Achieve a Lifetime of Financial Security".. I think he was giving me a big hint... like uhhh... DAUGHTER... time to start being more aware of your fiscal consumption!

Wow - Just stopped by to visit and you really spoke to me - I am 63 yrs. old - a widow - with an artist's mentality - lacking math ability - and am attending a Dave Ramsey Finanacial Seminar wishing I knew all this information before I even had children - I love what you have to say and I am learning how to ask my own questions and get the help I need myself - Kik's husband is great that way!!! - I love what you had to say - and knowing that others are leading the way!!! Kik's Mom

Kiki,Thanks for sharing your story. I think having a mortgage that can be supported with one salary is a very good point! You never know when your circumstances may change: job loss, pregnancy, death. Very smart you guys.We only have one income so we had to do that... but I can imagine the temptation of going bigger and better when you have two incomes. I'm sure we would have gone for more (or would want to when I go back to work) so I'm glad you put this out there since I will remember that!

Smita,thank you :)

Katieo,LOL!I really am using the Hunt book. We're not destitute but I do need to learn how to manage money and how to make smarter decisions. Believe me we could definitely be saving more. Plus with our uneven income you were right and it has helped me to start to feel like I can still get a handle on things.

SawSaw,I wouldn't say I'm really savvy about finances... but I hope that I can feel that way soon. :)

When my little bro graduated from college last year I told him to get a finance book and participate in his 401K to maximum matching and/or get an IRA and put in as much as he could each month. I WISH I had done that when I was his age. Starting early makes a huge difference not just in the growth you can earn but in just establishing that as part of your management skills right off the bat.

I wish they had offered some kind of consumer math class in college!

Claire,Thanks for commenting :)How do you like the Dave Ramsey course?I really resonate with how you describe yourself... artists mentality with no math skills. You just summed Mr F up! (me too to some extent... that is really how I was raised)I find for myself that finances seem over my head. I think it has been easier for me to think that then to take responsibility. I can be a bit of an all or nothing type, so I am trying really hard to do this slowly and take my time. I can get frustrated by what I don't understand and just want to know it and move on... but I really want to be smart and make thoughtful long lasting decisions. I'm giving myself a year to try and get on course.

Oh and please let Kiki do more fashion posts with you in them. My mom could benefit from your modeling :)

I think it's a great topic to open up - even just to get other to think about their own spending. It worked for me. I am getting my taxes done tonight and I started looking at last years numbers. Every year my tax guy says "there is no reason you should not own a home." But I don't feel that way becuase I feel "strapped" sometimes with just rent. But when I look at "where my money goes" it's a flippin joke! For example $938 last year at the NAIL SALON. Hello! LAME. I don't even want to add up the eating out/drinking expenses. ha.

I say I feel "strapped," however I chose to spend my money by buying nice clothes, living in a very pricey area AND traveling the world. And on a good note, I did get myself into crazy debt in my early 20s. It took me about 8 years to get out of. Now I am debt free and have a retirement plan.

Thanks for making us think :)(Cuz Lord knows sometimes I like to NOT think about this kind of stuff)

P.O.M.,Thank you. That is really what I am trying to do with these posts... just put the topic out there.And this is a unique time in your life... live it! You're being responsible. Once you have kids you may find the only countries you travel to are in Epcot ;)

Speaking of EPCOT, when I told my friend Megan I had met a nice man from Norway she immediately said that's the most fun country to drink at EPCOT. I love it!

Great post, and I think Katie O's assessment yesterday was dead on -- it's all about knowing what's going on. The Money, A Memoir book talks alot about that, how women do this deliberate ignorance thing when it comes to money. Terrifying.

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